Automated decisions at nanosecond speed: but which decisions?

Most organizations make thousands of decisions every day -- is it necessary to have thousands of humans making them?
Written by Joe McKendrick, Contributing Writer

How much of our decision-making can, or should, be automated?  Quite a bit, it looks like.

We have the technology and tools to automate many of our decisions at blinding speed. But is there a line that should be drawn for some decisions? James Taylor, a thought leader in the automated decisions space, says most organizations make thousands of decisions every day. Should a customer be granted additional credit? Is a transaction fraudulent? Should a customer be extended an upsell offer?

In many cases, analytics systems, in combination with business rules engines and modeling tools, can handle many of the repeatable, day-to-day decisions that businesses face. James talks about these new opportunities in a new work, Decision Management Systems: A Practical Guide to Using Business Rules and Predictive Analytics. I've known James since his days at Fair Isaac, and any time he begins a discussion about automating decisions, he says the process needs to start at one place: "begin with the decision in mind."

There are decisions that automation can't touch, of course. Strategic decisions, such as whether to enter a new market or launch a new product, requires human thinking.

But there are plenty of more routine types of decisions that can safely be automated,  James explains:

Repeatable decisions: "Operational decisions are the day-to-day, run-the-business decisions that are taken in large numbers by every organization... Every order placed, every customer interaction, every claim, or credit card transaction."

Operational decisions: Decisions that relate to an individual customer or an individual transaction with the same outcomes. "Despite their low individual value, they are extremely valuable in aggregate. A decision made thousands or millions or even billions a year has a total value that often exceeds even the most important strategic decision."

Micro decisions: While micro decisions focus on specific customers or situations with different outcomes, these outcomes could be determined "with everything known or predictable about a customer to make a unique decision about them."

Tactical decisions: Repeatable tactical decisions often relate to management control of operations, such as the staffing required by a call center for the coming shift."

Ultimately, decision automation is about the ability to make predictions, James writes. While traditional information systems "present historical data as analyses to people, automated decision systems "embed analytics that predict risk, opportunity, and impact deep into the system itself."

By better automating decisions, companies can make gains in agility and competitiveness, Taylor says. “The use of business rules in decision management systems has given organizations the agility to respond rapidly to competition and market changes, to avoid business risks, and to take advantage of narrow windows of opportunity,” he points out.

This post was originally published on Smartplanet.com

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